Facing Ukraine shock, Egypt requests new IMF loan

Egypt will apply for a new loan from the IMF, the Washington-based crisis lender announced Wednesday, after Russia's invasion of Ukraine caused inflation to spike in the Middle Eastern nation.

"The rapidly changing global environment and spillovers related to the war in Ukraine are posing important challenges for countries around the world, including Egypt," the lender's mission chief in Egypt Celine Allard said in a statement.

"In that context, the Egyptian authorities have requested the International Monetary Fund's support to implement their comprehensive economic program."

Egypt is heavily reliant on wheat imports from Russia and Ukraine, and its inflation rate hit 10 percent in February amid a wider spike in global commodity prices caused by the war.

"A set of macroeconomic and structural policy measures would mitigate the impact of this shock on the Egyptian economy, protect the vulnerable, and preserve Egypt's resilience and medium-term growth prospects," Allard said.

Last June, Cairo received the final disbursement of a program totaling $5.4 billion to help the country during the Covid-19 pandemic.

Egypt has undertaken tough austerity measures including slashing subsidies and floating the local currency in 2016 as part of IMF-backed economic reforms.

Poor and middle-class Egyptians have been especially hit by the policies, which saw inflation peak at 34 percent in 2017.